David Canellis

<div id="highlights-block_6351a03e9bbcd" class="highlights">
 <ul>
 <li>Major energy consumers across Wyoming pay more for their energy to keep the total grid cost low</li>
 <li>This has made the state’s pro-crypto banking laws less appealing to bitcoin miners</li>
 </ul>
 
</div>



Wyoming lawmakers are reportedly set to mull special deregulated zones for large scale energy consumers such as bitcoin miners next week.&nbsp;



Two draft bills on the table would make room for a framework to provide cheap electricity to bitcoin miners (and other power-hungry facilities such as data centers), while protecting regular folk from price spikes due to surging usage, local outlet WyoFile <a href="https://wyofile.com/lawmakers-flirt-with-deregulated-zones-for-crypto-miners/">reported</a>.



One <a href="https://wyoleg.gov/InterimCommittee/2022/09-2022102723LSO-0050v0.5.pdf">bill</a>, focused on “industrial power zones,” would specifically award regulatory exemptions on power consumed in designated areas.&nbsp;



The <a href="https://wyoleg.gov/InterimCommittee/2022/09-2022102723LSO-0052v0.7.pdf">other</a>, “direct electric utility service agreements,” would instead seek to allow power companies to strike deals outside of existing pricing regulations — regardless of where in the state they operate.



Both bills are sponsored by Wyoming’s Joint Minerals, Business and Economic Development Interim Committee, a bipartisan <a href="https://ballotpedia.org/Joint_Minerals,_Business_and_Economic_Development_Committee,_Wyoming_State_Legislature">group</a> within the state legislature with ties to major players across Wyoming’s energy industry.



Wyoming has reportedly received a steady stream of requests from dozens of bitcoin miners eager to set up shop across the state. A series of pro-crypto <a href="https://cms.blockworks.co/legal-expert-avanti-may-face-uphill-battle-getting-fed-payment-access/">laws</a> related to banking and incorporation has spurred interest, but Wyoming’s halfway-cheap electricity hasn’t been enough to convince bitcoin <a href="https://cms.blockworks.co/crashing-prices-expose-bitcoin-mining-industrys-addiction-to-leverage/">mining outfits</a> to jump.



The <a href="https://www.eia.gov/electricity/state/">average retail price for electricity in Wyoming</a> is 8.27 cents per kilowatt hour, per the US Energy Information Administration, while the national US average is $10.59.



Such a difference results from significant consumers such as oil plants and strip mines actually paying higher rates than regular consumers, bringing down the overall shared cost of the whole Wyoming grid.



<h3 class="wp-block-heading">More bitcoin miners in Wyoming could bring higher state revenues</h3>



This shared-cost system, however, discourages energy-intensive operators, such as bitcoin miners, from moving to Wyoming.&nbsp;



The state also exports more than half of the energy it generates, according to WyoFile, and the draft bills up for discussion don’t specifically encourage creation of new power generation facilities.&nbsp;



Sen. Chris Rothfuss told reporters this has led to missed revenue from state coffers, as Wyoming earns taxes on every kilowatt hour consumed on the local grid — not on energy exported.



There are, though, concerns over whether Wyoming’s grid could handle an influx of bitcoin miners interested in taking advantage of potential deregulation. Texas&#8217; deregulated ecosystem struggled under pressure throughout the summer, and <a href="https://www.bloomberg.com/news/articles/2022-08-03/bitcoin-miner-made-millions-by-shutting-rigs-during-texas-heat">deals</a> with bitcoin miners were made to power down in times of peak demand.



The Wyoming Rural Electric Association, representing 14 energy co-ops in the state, reportedly opposes both bills. Not to mention, the largest regulated local utilities — one of which is already contracted with bitcoin mining outfit Bison Blockchain —- aren’t completely sold.



A similar measure discussed by lawmakers in the previous session, “deregulated industrial power zones,” ultimately failed.



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Pro-crypto Wyoming Not Yet Pro Enough To Attract Bitcoin Miners

Jocelyn Yang

Jack Kubinec

<div id="highlights-block_62b2288fda849" class="highlights">
 <ul>
 <li>Electricity to licensed crypto mining centers in Iran will be cut off — but illegal miners could be unaffected</li>
 <li>6.9% of all bitcoin mining worldwide took place in Iran in June 2021, but the country’s bitcoin hash rate share had fallen to 0.2% by January 2022</li>
 </ul>
 
</div>



Iran will cut electric power to all of its 118 licensed crypto mining centers starting June 22 as summer temperatures drive up power demand, energy ministry spokesperson Mostafa Rajabi Mashhadi said on state TV, according to a <a href="https://news.bloomberglaw.com/crypto/iran-to-cut-power-supply-to-licensed-crypto-miners-state-tv" target="_blank" rel="noreferrer noopener">Bloomberg</a> report.



The country’s energy demand is repeatedly hitting all-time highs, the ministry said. “According to forecasts, this week&#8217;s consumption requirement will exceed 63,000 megawatts, which means we must limit electricity supply,” Rajabi Mashhadi <a href="https://arzdigital.com/iran-will-cut-off-crypto-miners-power/" target="_blank" rel="noreferrer noopener">said</a> in an interview that was translated into English.&nbsp;



This is the third time Iran has suspended local crypto mining activities to prevent power blackouts in the past year. The government previously <a href="https://www.aljazeera.com/economy/2021/12/28/biran-orders-crypto-mining-ban-to-prevent-winter-blackouts" target="_blank" rel="noreferrer noopener">halted operations in the winter and summer of 2021</a> due to the same seasonal electricity issues.&nbsp;



<h3 class="wp-block-heading">Crypto mining&nbsp;in Iran</h3>



The Iranian government officially <a href="https://www.aljazeera.com/economy/2019/8/5/irans-government-recognises-cryptocurrency-mining-with-caveat" target="_blank" rel="noreferrer noopener">recognized</a> cryptocurrency mining as a legitimate business activity in 2019 and <a href="https://asiatimes.com/2020/01/iran-issues-1000-crypto-mining-licenses/" target="_blank" rel="noreferrer noopener">issued over 1,000 crypto mining licenses</a> to bring capital into the heavily-sanctioned country. Miners are required to pay a tax on their electricity and <a href="https://www.elliptic.co/blog/how-iran-uses-bitcoin-mining-to-evade-sanctions" target="_blank" rel="noreferrer noopener">sell their mined crypto to Iran’s central bank</a>.&nbsp;



Still, low-cost electricity kept attracting local miners. Iran&#8217;s bitcoin mining accounted for 6.9% of the total bitcoin hash rate in June 2021, according to the Cambridge Centre for Alternative Finance (CCAF), putting it comfortably among the top 10 bitcoin mining countries in the world.&nbsp;



At the same time, increasing instances of illegal bitcoin mining in Iran has led to regulatory scrutiny. Iranian police <a href="https://www.reuters.com/technology/iran-seizes-7000-cryptocurrency-computer-miners-largest-haul-date-2021-06-22/" target="_blank" rel="noreferrer noopener">seized 7,000 mining computers</a> at an illegal cryptocurrency farm in June 2021, Reuters reported.&nbsp;



It is also becoming increasingly common for Iranians to mine bitcoin at home using the country’s subsidized household electricity. Pictures have surfaced online of mining machines running inside a mosque — which receive free electricity in Iran — according to blockchain analytics firm <a href="https://www.elliptic.co/blog/how-iran-uses-bitcoin-mining-to-evade-sanctions" target="_blank" rel="noreferrer noopener">Elliptic</a>.&nbsp;&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">تو مسجد بیت‌کوین ماین می‌کنند قربت الی الله <a href="https://t.co/cPdOo0g0hK">pic.twitter.com/cPdOo0g0hK</a>&mdash; رضا مهدوی (@Rmahdavii) <a href="https://twitter.com/Rmahdavii/status/1143766769783328769?ref_src=twsrc%5Etfw">June 26, 2019</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Access to off-grid electricity and geographically scattered, small-scale operations are among the major means used by underground miners to hide their operations from authorities and circumvent the ban,” CCAF <a href="https://www.jbs.cam.ac.uk/insight/2022/bitcoin-mining-new-data-reveal-a-surprising-resurgence/" target="_blank" rel="noreferrer noopener">said</a> in an analysis.



Between 2015 and 2021, bitcoin mining funneled more than $186 million into Iran-based cryptocurrency services, a <a href="https://go.chainalysis.com/2022-Crypto-Crime-Report.html" target="_blank" rel="noreferrer noopener">Chainalysis crypto crime report</a> showed. The report also stated that illegal bitcoin miners accounted for around 85% of the cryptocurrency activity in the country.&nbsp;



Mining activity in the country appears to have tailed off, though. By January 2022, Iran accounted for a paltry 0.2% of the global hash rate, according to <a href="https://ccaf.io/cbeci/index" target="_blank" rel="noreferrer noopener">Cambridge Bitcoin Electricity Consumption Index.</a> This spring, the Iranian government drafted new measures to increase the penalties for illegal crypto mining using subsidized electricity, including rising fines by a minimum of three and a maximum of five times, and imprisonment of the offender, according to <a href="https://www.tehrantimes.com/news/471749/Iran-to-increase-penalties-for-illegal-cryptocurrency-mining" target="_blank" rel="noreferrer noopener">local media</a>.



Unauthorized crypto mining “activities are a threat to the country&#8217;s energy security, they inflict huge damage on the national grid…and so the consequences must be in proportion to the damages,” <a href="https://financialtribune.com/articles/business-and-markets/113882/new-crackdown-on-illegal-cryptominers">said</a> Mohammad Khodadadi Bohlouli, the official in charge of supplying power to legal cryptomining centers at Iran Power Generation and Transmission Company, or Tavanir.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.